Naturally, the actual cost of a nightly stay is only one part of the spending dollars hotels hope to capture from consumers. Restaurants, gift shops, spas/salons, in-room amenities, and additional services and experiences are also on the table, providing plenty of opportunities for guests to spend substantially more than the simple cost of the room.
Unfortunately, one of a hotel’s biggest moneymakers is facing an uphill battle, at least with the younger generations. A 2023 Gallup poll revealed that drinking is down among young adults ages 18 to 34. Only 62 percent of adults under age 35 say they drink, down from 72 percent 20 years ago.
The reasons why they don’t drink as much vary, but generally include health concerns, high prices and an increased use of marijuana, Gallup noted. This presents a challenge for hotels and the bars and restaurants that occupy them, as food and beverage sales can represent between 30 percent and 40 percent of total hotel revenue. Alcohol sales can account for up to 25 percent of that profit, according to the National Alcohol Beverage Control Association.
Alcohol alternatives
Many hotels and restaurants are responding to this trend by leaning into what Gen Z does drink. This includes spirit-free mocktails.
“The cultural change has already begun, and the non-alcoholic category is exploding in popularity,” says Edwin Frizzell, general manager of Fairmont Royal York and regional vice president of Central Canada of Fairmont Hotels and Resorts.
An $11 billion industry in 2022, the non-alcoholic category is expected to grow by 25 percent in the four-year period ending in 2026, according to the International Wine and Spirits Record (IWSR).
“As no- and low-alcohol becomes a more established part of the beverage alcohol landscape, growth is slowing after a peak in 2020 to 2021 – but the category is poised for robust gains in the coming years, spearheaded by no-alcohol and persistently strong recruitment levels,” says Susie Goldspink, head of no- and low-alcohol insights at IWSR.
Daniel Grajewski, senior director of wine and beverage for the José Andrés Group, notes that the social aspect created by restaurants and hotels still entices the younger generations. When they do go out, many are looking for an experience that includes a “drink” – even if that drink doesn’t include alcohol.
The key, then, to capturing this demographic is creating beautiful, complex and tasty mocktails that still command a higher price and provide the feeling of socialization this generation craves.
“Guests today want so much more than a simple juice-driven option,” Grajewski explains. “Investing into developing complex, layered spirit-free drinks that are seamlessly integrated into our overall cocktail program shows how much we care about quality, balance and innovation in all our drinks.”
Frizzell adds that the spirit-free menu must put the ingredients front and center.
“Sustainability needs to be at the forefront, menus need to have a story, and ingredients need to be sourced locally in support of the local community as they are aware of environmental and social issues,” he says.
The alcohol-free menu at the Bazaar by José Andrés inside the Sahara Hotel in Las Vegas, for example, features non-alcoholic drinks like “Squaring the Circle.” Ingredients include Kentucky 74, an alcohol-free bourbon substitute, Lyre's amaretti, an alcohol-free amaretto substitute, maple and cumin tincture. It also features an $18 price tag, about $4 less than its alcohol-forward cocktail selection and around $8 more than its least expensive wines by the glass.
It’s also worth noting that a reduction in drinking is not a complete abstinence from alcohol – at least not for the 62 percent of young Americans who do drink.
“We still see a strong turnout for post-work or late-night drinks,” Grajewski notes. “We are also seeing a rise in premiumization – guests who may be cutting back on quantity but want high quality and are willing to pay for it. You may have a guest scale back from three drinks but not have an issue paying more for one incredibly well-crafted cocktail.”
When they do drink, Frizzell notes that the younger patrons tend to favor hard seltzer and low-alcohol drinks. When they don’t, he sees them ordering sparkling beverages and cold-pressed juices.
Other alcohol alternatives are rising in popularity as well.
“Alcohol-centric venues can feature CBD-infused cocktails and adaptogenic teas (mushroom tea, ginseng tea, etc.) to attract younger guests while keeping existing concepts intact,” Frizzell adds.
Younger tastes
Though recapturing those alcohol dollars is a primary goal for hoteliers and restauranteurs when it comes to the younger generations, there are other trends that can result increased spending as well. Sleep tourism, for example, capitalizes on Gen Z’s appreciation for a good night’s rest. Healthier food options also play to this cohort’s health and wellness-centric lifestyle.
“Our spaces must be reimagined as new generations value experiences that foster social connection, personal growth and inclusivity,” Frizzell says. “Embracing the clean-living movement means offering healthier menu options that promote a care-for-your body mindset.”
He also recommends a menu that caters to different diets, including vegan, vegetarian, dairy-free, gluten-free and more. The logic is that, just as this generation may opt to have a drink one night and spirit-free cocktails the next, they want food choices based on their preferences that day. Flexitarianism – eating a diet of mostly plant-based foods with meat and animal products occasionally mixed in – is also big to Gen Z, Frizzell notes.
Once again, marketing where the ingredients came from is key.
“Health and wellness are the preferred lifestyle, and Gen Z are favoring food options that are aligned with their views,” Frizzell continues. “This includes flexitarian eating habits that support their overall wellbeing and incorporate their sustainability goals.”
Ultimately, Grajewski adds, Gen Z is the generation of choice, so those choices should include a wide selection of food and drink possibilities.
“Every generation shifts a bit with how they want to invest their money, and I think what we’re seeing now with this new group of drinkers is that they want to decide for themselves,” he says. “This group is probably about 25 percent of our current guests, so it’s certainly something we take note of when designing offerings – not to make wild changes overnight – but to be attentive to guest interests and needs.”
Appealing to this generation also means finding them where they are. No, that’s not in bars sipping alcohol-free spirits…it’s on social media. Frizzell believes restaurants and hotels can continue capturing these consumers by telling a story, hyping their sustainability practices and highlighting their local ingredients (and where they came from) online. He adds that these images and videos should be both visually appealing and interactive.
“They’re the two main factors to drive engagement with Gen Z,” he says.
Grajewski agrees this is a winning formula, noting this generation values a genuine approach.
“More than anything, I think our guests appreciate authenticity and attention to details that make all the difference,” he says. “Guest loyalty comes more from investing in that than chasing trends. By continually striving to do what we do better, we keep evolving and bringing something new to the table.”